Beyond Guanxi: Network Contingencies in Taiwanese Business Groups
Chi-Nien Chung*
National University of Singapore
* To whom correspondence should be addressed.
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Abstract |
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Business groups consisting of legally independent affiliates with
institutionalized relationships with each other exist in almost every market economy.
While the groups are important and pervasive, little attention has been paid to the
processes by which business groups emerge and grow. Reasons for this gap include a) a
deficiency of the top-down, macro perspective of many business group studies, and b) the
overemphasis of Guanxi networks in the literature of business organizations in East
Asia. Personal relationships (Guanxi) are treated as the necessary and sufficient
condition for the entrepreneurship and evolution of business groups. In an attempt to
refine the Guanxi perspective, the author uses case studies of five major Taiwanese
business groups to propose a set of contingency factors. The suggestion offered in this
paper is that entrepreneurs' attributes and contextual factors are inseparable from the
functions of the Guanxi network in the entrepreneurial process. Tracing the movements of
these groups over the past four decades, it appears that group diversification evolves
in a path-dependent fashion as opposed to a Guanxi-driven, idiosyncratic pattern as
suggested by the Guanxi perspective. The influences of Guanxi for group diversification
were clear in the early stages when markets were tightly controlled and the
personalistic networks became the core capabilities underlining diversification.
However, as groups grew and institutions developed, the significance of political Guanxi
diminished and the decision-making of diversification strategy became hinged mainly upon
the resources firm accumulated overtime.
Key Words:
entrepreneurship, diversification, business groups, Guanxi, Taiwan
